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Weekly review
June 7, 2019

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Planting progress for the week ending May 26th came in at 58 percent planted for corn compared to last week's 49 percent, which is still 32 percent behind the 5-year average of 90 percent.

This is leading to continued talks about prevent plant acres and acres switching to soybeans with rumors circulating of maybe 5 million acres lower on corn than what the prospective planting report stated. Soybeans were at 29 percent planted compared to the prior week's 19 percent while still lagged 37 percent behind the 5-year average of 66 percent.

As of Sunday, May 26th, the second largest corn producing state of Illinois still had a large 7.2 million corn acres unplanted. South Dakota data is also very noteworthy as 4 million of 6 million corn acres remain unplanted

A very wide range of estimates is circulating around trade about prevent planting of corn acres, making the situation even more uncertain. A range of 2 to 15 million corn acres is floating around the trade, but analysts believe the market is factoring in a range between 4 and 7 million. The potential acreage switch to soybean production is also highly contested now, with the recent farmer aid package just adding to the uncertainty.

Nearly all of the focus in the grain markets recently has been on extremely persistent wet weather in the Corn Belt this spring season. Certain areas are set up to see the wettest May in more than 125 years. Exceeding 1995 by a wide margin. The potential impact on acres will be debated for months to come. At the end of June the USDA will release their updated acreage estimates but it would not be surprising to see the debate last well beyond their release.

The trade war with China has taken a backseat to the weather markets in recent weeks but concerns remain. Since the latest escalation between the U.S. and China, Chinese goodwill soybean purchases have come to a stop. USDA data shows that since the truce in December, China has purchased 13 MMT of U.S. soybeans but data shows that to this point, they have only taken delivery of 7 MMT. Sources close to the matter do not believe they will cancel these sales but the risk is still there.

The newly announced tariff aid package is designed to discourage a stronger shift to soybeans. Acres must be planted to qualify for tariff aid and prevent plant does not qualify. Details on payment levels are vague and may continue to be vague until after the June 30th planted acreage report. Initial information indicates county payment levels will be determined this summer. Rumors of a $2/bushel payment on soybeans are not confirmed. The Secretary of Agriculture has said a producer has to have produced a crop to be impacted by the markets to quality for tariff aid. They do not want to influence planting decisions with the aid package and the reason why they are being vague on further details.

For more information, you may contact Adam Suntken at (712)-454-1061, or e-mail at asuntken@maxyieldcooperative.com. The opinions and views expressed in this commentary are solely those of Adam Suntken. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position. Please visit our Risk Disclosure Page for more information on commodity trading.

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